Airbus, Boeing jumbos are struggling for sales

Airbus and Boeing put their flagship jumbo jets on display last week at the Berlin air show, and while the gleaming white aircraft are crowd-pleasers at any event, they’re getting less affection from the audience that matters most: airlines.

Airbus has won orders for just four A380 superjumbos in 2012, and sales chief John Leahy said Tuesday he’s running out of time to get to his target of 30. Boeing’s last deal for its 747-8 came in July 2011, raising the prospect that this year would be the first shutout since the plane’s initial purchase in 1966 heralded the age of intercontinental travel.

“The theory was that the combination of rapid growth and airport constraints would force carriers to up-gauge and go to very large aircraft,” said Robert Mann, a former American Airlines fleet manager who is now an industry consultant in Port Washington, N.Y. “But for any given airline it becomes a daunting prospect to fill 500 seats with every departure.”

Boeing and Airbus are the only commercial planemakers offering four-engine jets. The 747-8 is the world’s longest airliner, measuring 250 feet from nose to tail, while the A380 boasts a full-length double-decker cabin.

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The two manufacturers remain confident they will overcome the lull, and that the success of aircraft programs is measured in decades.

“One or two or three years in which the demand for very large aircraft is not so strong does not mean you can prematurely call the end of such aircraft,” Tom Enders, CEO of Airbus parent European Aeronautic Defence & Space Co., said in Berlin.

Spending carefully

Emirates flew in the A380 in Berlin, while the 747-8 is operated by Deutsche Lufthansa, which accounts for 20 of the 36 orders for the variant of that plane. Europe’s slump, cooling growth in Asia and a slowdown in global air-traffic gains are keeping most airlines at arm’s length from jumbo jets.

Virgin Atlantic Airways Chairman Richard Branson said in July that he would again delay his six orders for A380s because of the adverse environment. Turkish Airlines, a long- running potential buyer for jumbo jets as it beefs up its network, has pared its ambition to six planes from 15.

The A380 has a list price of $390 million and typically seats about 525 passengers in a three-class configuration. The 747-8 lists for $351 million and seats about 467 travelers in three classes.

“What is happening isn’t so much demand has changed but airlines are thinking more carefully about spending that level of money,” said Rupinder Vig, a London-based analyst at Morgan Stanley.

While the jumbos are popular on routes they serve, Boeing and Toulouse, France-based Airbus must still win over airlines whose passengers prefer flexibility when they travel. That drives demand for more, smaller jets than a single large one.

China and India, the world’s two most populous countries, will be pivotal markets to make or break the future of superjumbos.

China Southern Airlines is the only Chinese carrier with an order so far, for five A380s. Air China committed to five 747-8s, without signing a deal yet. In India, Kingfisher Airlines is the only customer, also with five A380s.

“China is not yet there, but China will be a huge market for the A380,” Airbus CEO Fabrice Bregier said in Berlin. “It will take some time.”

Both manufacturers may struggle to ever recoup their investment to develop the A380 and 747-8. Airbus remains far off break even after the program ran $7.8 billion over budget and the aircraft maker has scrapped the goal of boosting output to four A380s each month. Costs have piled up after cracks emerged in the A380’s wings, which Airbus must now fix.

Barclays estimates that by the time the 747-8 program breaks even on a cash basis, Boeing will have poured in more than $8 billion after delays. The planemaker, which doesn’t disclose detailed investment costs, took $2.04 billion in charges as postponements pushed back the jet’s debut by two years before the cargo version entered service in 2011.